July 31, 2012, 6:13 PM — Microsoft's new email service, Outlook.com, is more than an update to its free email offering. It's also a one-two punch against major rival Google.
On Tuesday, Microsoft took the wraps off its new webmail service, which eventually will replace the highly popular Hotmail. The updated service is a big redesign that allows Outlook.com accounts to be synchronized across a range of devices, and includes integration with social networking sites like Facebook, Twitter and LinkedIn.
"While many people, particularly younger people, rely more on social messaging than email, email is still the preferred method for long-form communication," said Patrick Moorhead, an analyst with Moor Insights & Strategy. "Microsoft wants desperately to run away from Hotmail.... Hotmail got very stale with its feature set and needed to be replaced for this decade's use of richer media, like photos and video, social connected accounts, video communications and chat."
While Microsoft plans to replace Hotmail with Outlook.com, the company also is hoping that it will replace Google's Gmail service for a lot of people. And that would be a blow to a company that has become one of Microsoft's main rivals, competing on several different fronts, including free email services, search, browsers, operating systems and cloud-based enterprise apps.
"This is certainly a competitor to Gmail and, from what I can tell, a very solid competitor," said Dan Olds, an analyst with The Gabriel Consulting Group. "Hotmail still has more users than Gmail, although the gap is closing. And Microsoft wants to maintain that lead, if not expand it."
However, that isn't Microsoft's only goal here, according to Olds.
The second blow in Microsoft's one-two punch is to beef up its suite of cloud-based apps for the enterprise, which is a major point of competition with Google and its Google Apps.
For now, Microsoft is billing Outlook.com as a consumer tool. But Olds said not to be fooled by that. Google's Gmail has been billed as a consumer service but it's acted as a gateway into the company's own enterprise apps for a lot of firms.
Olds also noted that Outlook.com could be upgraded to become a full-fledged enterprise app in the not-so-distant future.